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WSTA calls on Chancellor to cut wine and spirits duty by 2% after PM’s plea to build a stronger economy and empower UK business


Independent economic modelling shows cut could boost wine and spirits industry by £2.9bn and Treasury revenues by £368m

Cut would save UK’s 38m wine drinkers 10p per bottle and 31m spirits drinkers 55p per litre

Call comes as wine trade is hit with Brexit cost of £594m

 

Theresa May this week called for Brits to face "no new barriers to living and doing business" and let out a rallying cry for a "better deal for ordinary working people at home."

The PM set out a 12-point plan for leaving the EU vowing to “take this opportunity to make Britain stronger”.

 

Miles Beale, Chief Executive of the Wine and Spirit Trade Association said:

“There is one way Theresa May’s Government can ‘empower’ British business almost immediately, and that is to support our industry with  a 2% cut in wine and spirits duty at the next Budget. This would strengthen British business, give consumers a better deal and benefit the Chancellor too.

Evidence shows that a moderate cut in duty would give the industry a £2.9bn boost but also help relieve the pressure on consumers that are facing very high duty rates and the growing pressure of rising inflation. A growing industry and a fairer tax regime is proven to increase revenues to the Treasury too.

At a time when inflation is rising, and with the added costs and uncertainty that Brexit brings, there has never been a better time for the Chancellor to act positively by addressing the wine and spirit industry’s historically high duty levels and harnessing its potential.

The Government’s Budget will have a profound impact. Not just on the wine and spirits industry but on its workers and consumers who enjoy its quality products. This is why our message to the Chancellor is clear cut. It is time for him to be bold, to back British business and to make the cut in wine and spirits duty.”

 

Independent forecasters have predicted that this modest drop would allow the wine and spirit sector to contribute a further £2.9bn in economic activity to a record breaking level of £52.6bn.

The cut would also help to boost the Chancellor’s coffers by a further £368m as the industry grows and revenues increase according to EY. These calculations are backed up by a recent duty cut success story. After a freeze in wine duty in the 2015 Budget, wine duty income increased by £136m (+3.6%) the following year and after a 2% cut in spirits duty that year, spirits duty income increased by £124m (+4.1%) over the same period.

The UK’s wine industry is at the centre of the global wine trade and incudes a sparkling English wine sector that is already exporting to 27 different countries.

The UK spirits sector is one of Britain’s most valuable exports with a booming British Gin industry which topped £1bn of UK sales for the first time last year.

Overall the wine and spirit industry supports over 550,000 jobs across the U.K. in vineyards, distilleries, bottling plants and logistics companies.

The call comes as UK wine businesses particularly are reeling from the triple impact of historically high duty rates, higher inflation and the devaluation of the pound. This will hit the wine industry with at least £594m in further costs as the UK currency continues to slide against key markets such as the US Dollar, the Euro and Australia Dollar.

Last year the WSTA warned that currency fluctuations could lead to wine prices going up by an average 29p per bottle. Meaning that any increase in duty, on top of the post-Brexit Sterling devaluation, could have dire consequences on Britain’s wine trade.

The cut would also come as welcome relief to the UK’s 38m wine consumers and 31m spirits consumers as it would knock off 10p on a bottle of wine and 55p from a litre of spirits compared to an inflationary rise, expected to be at around 3%. Consumers are already paying a staggering 55% of the average bottle of wine on duty and VAT and 76% for the average bottle of spirits and anger at this showed in recent polling where 62% of the public said wine duty was too high and 70% said that spirits duty was too high.

To find out more about the WSTA 2017 Budget Submission click go to: http://bit.ly/2017Budgetsub

Ends

 

Notes to editors:


 Wine and spirits duty facts
- Wine businesses and consumers pay £4bn in duty and duty and spirits businesses and consumers a further £3.2bn.
- The duty on a bottle of wine is £2.08, meaning that 55% of the cost of the average bottle in shops and super markets is taken up in tax and VAT.
- The duty on a 70cl bottle of spirits is £7.26, meaning that 76% of the cost of the average bottle of spirits in shops and supermarkets is taken up by duty and VAT.
- Duty rates for wine have increased by 56% since 2007 and spirits duty rates have increased by 41%
- Compared to an inflationary rise of 3%, a 2% cut in duty would be worth 10p for a bottle of wine, 13p for a bottle of sparkling wine and 55p for a litre of spirits
- UK businesses and consumers pay the 4th highest duty rate for spirits in the EU accounting for a quarter of all Spirits Duties (26.15%), 39.26%.
-UK businesses and consumers pay the 2nd highest duty rate for spirits in the EU accounting for two thirds of all duties collected by member states

The EY modelling revealed that 2% cut would:

·         Increase overall economic activity in the wine and spirit sector by £2.9bn (+6%).
·         Increase overall revenues to the Treasury by a projected £368m (+2%).
·         Increase industry contributions to the UK’s GDP by a projected £1.6bn (+6%).
 

The WSTA is the UK organisation for the wine and spirit industry, representing over 300 companies producing, importing, transporting and selling wine and spirits. The WSTA works with its members to promote responsible production, marketing and sale of alcohol.

If you would like anymore information on this then please contact:

 

Lucy Panton - [email protected]

Tel: +44 (0) 207 0893875

Mobile: + 44 (0) 7776422656

Harriet Talbot [email protected]

Tel +44 (0) 207 0893875

Mobile +44 (0) 7587290720


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